Opening Remarks

Thatcherism, R.I.P. Britain's Economy Needs New Ideas

Members of the media report from outside Margaret Thatcher’s residence in London’s Chester Square on Apr. 9

Margaret Thatcher was chauffeured away from No. 10 more than 20 years ago, yet her death has provoked greater political ferment than many elections. Within hours of Thatcher’s passing, children left flowers outside her home in the London enclave of Belgravia; half an hour away in the somewhat earthier environs of Brixton, hundreds of people turned out to hold a street party. As I type this, an earnest campaign is afoot to get the Wizard of Oz tune Ding Dong! The Witch Is Dead to No. 1. At the other extreme, Conservative MPs and commentators are so puffed up on Thatcher’s greatness that dissenters are liable to face accusations of sedition.

What accounts for this dissonance? It’s partly that two disputes have been set running at the same time. The first concerns Thatcher’s achievements in office and is the stuff of historical dates and statistics. The second has to do with Thatcherism: her commitment to rolling back the state, which has created the political parameters for all her successors, including the Labour Party’s Tony Blair and Gordon Brown. This is the fight the British are evidently spoiling for—an argument about who we are and how we got that way.

Few politicians bequeath an -ism. Even after a decade as prime minister, there’s nothing one could label Blairism. But it has been common over the past few days to say that Britons now live in a land shaped by Thatcherism—that her swinging cuts in taxes on the rich, liberalization of labor markets, and dismantling of controls on the flow of money forever changed the country. There’s something in that, although it should be remembered that the Tories never managed to bulldoze the country’s most significant institutions: Both the BBC and the National Health Service, providing free health care at the point of use, remain intact, and the welfare state, that emblem of postwar Britain, was made only a little less generous.

Although Thatcher died last week, the death blows for Thatcherism were delivered by the financial crisis of 2008. The U.K. hasn’t recovered from the meltdown; unlike the U.S., Britain’s gross domestic product is still below 2008 levels, while fresh banking scandals emerge regularly. Chairing a debate last summer on Thatcher’s legacy, I was struck that every panelist—including one former Thatcher minister—agreed that her ideology should be laid to rest. Last November the deputy governor of the Bank of England, Rachel Lomax, described how, while serving as a senior civil servant under Thatcher, she had been part of a project of “dismantling a version of capitalism” and replacing it with “Anglo-American neoliberalism.” The system she’d helped create was now, she as good as admitted, broken.

Thatcher privatized Britain’s electric and gas industries to create a new class of small shareholders. But episodes of mis-selling and cartel-like price hikes have left so-called popular capitalism looking distinctly unpopular. Britain suffers a chronic shortage of housing, a direct result of the Thatcher-era program to flog publicly owned homes and stop the building of any more.

Most of all, the U.K. has gone furthest and fastest down the road of deindustrialization. Thatcherites argued that private business would fill the gap with service-sector employment. Not so: Outside Britain’s southeastern corner, the public sector has had to create new jobs—hundreds of thousands of which are now being cut. After 30 years of Thatcherism, the British economy looks dangerously lopsided and grotesquely unequal.

As Britain’s five-year slump turns into a lost decade, politicians of all stripes talk ever more of the need to change an entire economic model. But convincing ideas on how to do that are few. Pushing through her policies, Thatcher used to declaim, ‘There is no alternative.” Thirty years on, it’s truer than ever.